Streamlined tax-exempt status in United States | KPMG | US

Final regulations: Streamlined exemption application for section 501(c)(3) status

Streamlined tax-exempt status in United States

The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9819) concerning the streamlined process of applying for recognition of section 501(c)(3) status.

1000

Related content

Today’s regulations [PDF 224 KB] finalize regulations that were proposed in July 2014 and remove corresponding temporary regulations. The final regulations allow the IRS Commissioner to adopt a streamlined application process for eligible organizations to apply for recognition of section 501(c)(3) tax-exempt status. The preamble to the final regulations states that the proposed regulations were adopted “without substantive changes.” 

Form 1023-EZ

An entity seeking exemption from federal income tax as an organization described in section 501(c)(3) generally is required to apply to the IRS on Form 1023, Application for Recognition of Exemption

In 2014, the IRS released Form 1023-EZ, Streamlined Application for Recognition of Exemption, to provide a less burdensome alternative for small organizations applying for recognition of exemption.

The preamble to today’s final regulations explains that the IRS is continuing to consider improvements to Form 1023-EZ based on its own experience and on informal comments received from the public and other stakeholders. For instance, the IRS is considering whether to require applicants to submit a brief statement of actual or proposed activities. Because the 2014 proposed regulations contemplated that guidance would set forth information to be required of Form 1023-EZ filers, the Treasury and IRS have concluded that the proposed regulations are sufficiently flexible to allow such a revision to the Form 1023-EZ at a future date.

The final regulations also amend the requirement that an organization claiming to be exempted from filing annual returns is to file a statement supporting its claim (with the statement being filed as a part of its application). Now an organization can file such a statement either in its application or by filing Form 8940, Request for Miscellaneous Determination.

Effective date

The final regulations will be published in the Federal Register and are effective on June 30. However, the final regulations (T.D. 9819) provide that because the now-removed temporary regulations have applied since July 1, 2014, and the proposed regulations that cross-referenced the text of those temporary regulations were adopted without substantive change, the final regulations apply on and after July 1, 2014.

 

For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Greg Goller | +1 703 286 8391 | greggoller@kpmg.com

Alexandra Mitchell | +1 202 533 6078 | aomitchell@kpmg.com

Randall Thomas | +1 202 533 3786 | randallthomas@kpmg.com

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit